Almost a million Londoners are trying to survive on poverty pay

Since 2010, the cost of living in London has outstripped wage growth on almost every measure

 

The triumphant tone of the chancellor’s Budget last week rang in sharp contrast to the everyday experience of most Londoners. Whilst George Osborne told a story of sunshine and growth, ordinary people in the capital and beyond face a much gloomier reality.

A new report I launched yesterday, The High Cost of Low Wages, set out that reality and it’s not pretty. Since 2010 the cost of living in London has outstripped wage growth on almost every measure. Whilst wages have grown by just 3.5 per cent since 2010, the capital’s living costs have rocketed:

  • Energy costs are up 26.5 per cent, 9.8 times faster than wages
  • Housing costs are up 34 per cent, 9.5 times higher than wage rises
  • Travel costs are up 20 per cent, 5.6 times faster than wages (Z1-6 Travelcard)
  • Food costs are up 13 per cent, 4.7 times faster than wages

When inflation is taken into account, London’s average real terms pay dropped from £700 a week in 2010 to just £646 in 2014. This amounts to a real terms cut of £2,802 a year as a result of wages rising far slower than inflation. All of this, however, was strangely absent from the chancellor’s rosy view of how the economy is doing.

Politicians can trade statistics all day long but speak to ordinary people, and you get the real picture. When I asked Londoners what they thought about the cost of living in the capital the response was stark:

“I am being priced out of the city I was raised in and I come from a comfortable background, heaven help those without the family support networks I enjoy.”

– 20-29 year old male from Hackney


“The only thing that’s not going up is salaries.”

– 40-49 year old female from Newham

 

“Energy bills going up and up. Cost of housing is a joke. Can’t afford to buy in London or the home counties despite having been born and raised in London.”
– 30-39 year old woman from Hammersmith and Fulham

 

“It is near impossible for young families to survive in London. They can’t afford housing or transport.”

– 50-59 year old female from Hillingdon

This isn’t a story of statistics – it’s about the impact on people’s lives.

With housing, travel and living costs rising far faster than wages it’s clear that the government’s economic policies are not working for the majority of people on low and middle incomes. Instead of pretending otherwise the government should be honest about the challenges of rising living costs and focusing on measures which, whilst simple, would make a massive amount of difference.

One of those relatively low hanging fruits is increasing uptake of the London Living Wage. The latest official figures from the Mayor’s Office show that in 2010, 557,000 Londoners were paid below the London Living Wage.

By 2014 this figure had risen to 917,000, leaving an additional 360,000 Londoners paid less than is deemed necessary to live in the capital. That means almost a million people are working for a wage below what they need to make ends meet. It’s not just a moral argument that this is wrong, it’s an economic one as it is left to the state to make up the difference, paying out tax credits to subsidise companies who pay a poverty wage.

Boris Johnson likes to boast about his support for the London Living Wage, but with prices outstripping wage growth and almost a million Londoners forced to live on poverty pay, there is a mountain to climb to make London a fair pay city.

As election season goes into overdrive you could be forgiven for thinking the high cost of living is less stark than some make out. Yet a few weeks ago the mayor’s own annual survey found that a staggering 92 per cent of Londoners agree that the cost of living has increased in the past year – a statistic which surprisingly didn’t make it into his press release!

It’s clear, not only from the figures but from peoples’ personal stories, that the economic recovery has not been felt by many low and middle income families. Prices up, pay down in real terms and thousands forced to get by on poverty pay – not a record any chancellor should be proud of.

Fiona Twycross AM is Labour’s London Assembly economic spokesperson. Follow her on Twitter 

8 Responses to “Almost a million Londoners are trying to survive on poverty pay”

  1. JoeDM

    Uncontrolled immigration forcing down British workers pay !!!

  2. robertcp

    Housing costs are the major problem in London and it should be an aim for house prices to stop increasing.

  3. Guest

    Lies you’re spouting to cover up for your Torynomics, blaming the Other rather than admitting you are the problem!

  4. Jack

    Immigrants put pressure on housing though. More demand + limited supply = rising prices. Now, you could argue that supply should have been increased, which is true, but since it hasn’t been, more immigrants have pushed up prices. That’s not about blame, it’s just what happened.

  5. Castilian

    Too right.

  6. Guest

    They’re a minor factor.
    It’s the only one you care about though.

  7. Guest

    Nothing like blaming the Other while opposing house building like the right, eh?

  8. MichaelHFerguson

    22222Ultra Income source by leftfootforward Find Here

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